FinTech foundations

Next big thing in the future of finance: Fintech revolution

Introduction

Fintech is disrupting the financial industry.

Is it a bubble or will it generate true lasting value?
Continued
 Financial Technology has been around since at
least the mid 1990s with the banking industry
being its largest buyer and user

 The integration of Finance and Technology

are transforming the industry

 The Fintech firms deliver more economical,

flexible, user friendly services,
disintermediating financial services and
capturing a considerable part of traditional
bank’s market share
Continued
Continued
Diversity of the market: while China dominate Asian Fintech
market by amount of funding, Different fintech verticals
started to grow.

Investments in Asian Fintech by Investments in Asian Fintech by 3%

sector (by number of companies country (by number of companies Korea
funded, % ) funded, %)
23%
21 13 6 5 3 China
13 4 35% 6%
Japan
8 6 5 India 15%
4 Singapore
4%
7 5 Philippines
2%
Lending e-Wallets Big Data Insurance Banking Malaysia
7%
Payments Blockchain For SME Remittance Regtech 5% Others
Indonesia
Investments PFM/PFP Crowdfuning /investing

Lending, Payments, Wealth management India, China and Singapore Interestingly, Pakistan, Laos, Myanmar,
and Ewallets are the top 4 sectors are the top 3 countries, where Bangladesh, Vietnam and Cambodia
that made almost 50% of all investments more than 60% of all fintech together have 8% of the total Fintech
in Asia. investments went in 2016. funded companies in 2016.
Note/source: Source: DJ PRO, CB Insights, Life.SREDA VC analysis, Capital IQ
So what exactly is Fintech?
Best described as…
Continued

 FinTech is technologically enabled

financial innovation that could result
in new business models, applications,
processes, or products with an
associated material effect on financial
markets and institutions and the
provision of financial services
Economic Survey 2023: UPI accounted for 52% of India's
total digital transactions in FY22
Fintech Framework
and almost 4.500 fintech startups

Alternative capital
Insurance
4%
Blockchain & 7%
Cryptocurrency 25% Payments
8%

Big Data Market share

10%
& Scoring (by amount of companies),
%

Investment 11% 23% Deposit & Lending

management
12%

Mobile Banking
& e-Wallets
Drivers for FinTech
Revolution
• Shifting Customer Expectation

• A Changing Economic/Regulatory Landscape

• A Rapidly Evolving Technology Environment

• Increasing Digital connectivity

• Cloud Computing

• Evolution of Visual Displays

Drivers for FinTech Revolution
Payments and deposits
Main Categories:

Online payments

Processing / acquiring

Recurring

International P2P

Merchant acquiring

B2B
Lending /
Deposits
Main Categories:

p2p lending

Loan Marketplace

SMB Lending

Supply Chain finance

Student Lending

Real Estate and industry

specific originators

Marketplaces
Insurance
Main Categories:

Online distribution

Policy management

Claims Management

Innovative on demands

Data & Analytics

P2P Insurance

Employee benefits

IoT / Sensors / Tele

What is Fintech

Crowdfunding and Alternative

Capital
Main Categories:

Crowdinvesting

Reward-based crowdfunding

Crowd-donating

Crowdlending

Crowdinvesting

Angel Networks
What is Fintech

Wealth management
Main Categories:

Robo advisory

Brokers

White label trading platforms

Predictive analytics

Market research

Quantitative trading

AI assistants, bots

PFM
Blockchain & Cryptocurrencies
Main Categories:

Blockchain tech for finance

Blockchain tech for others

Cryptocurrencies

Smart contracts
Big Data &
Scoring
Main Categories:

Credit scoring

Big Data

Risk management

Regtech

Machine learning and AI

Security
Mobile banking & e-
Wallets
Main Categories:

Mobile banking

Neo banks

Challenger banks

BaaS & BaaP

e-Wallets
India - A Global FinTech Superpower

• Fintech funding accounting to 14% share of Global Funding.

• India ranks #2 on Deal Volume.
• Indian fintechs were the 2nd most funded startup sector in India in 2022. 
• Indian Fintech startups raised $ 5.65 Bn in 2022.
• The total number of unique institutional investors in Indian fintech almost
doubled between 2021 and 2022, rising from 535 to 1019 respectively.
Continued
 Cross border linkage of India’s fast payment systems (UPI & RuPay network – QR code
& P2M based payments) with other countries, is aiding in enhancing the global footprint.
 Financial Inclusion: improved significantly over calendar years 2014 to 2021 as adult
population with bank accounts increased from 53% to 78%.
 Financial Literacy: The RBI has set up the National Centre for Financial Education and
plans to expand the reach of Centres for Financial Literacy (CFLs) to every block of the.
 Introduction of UPI123Pay and UPI Lite: Allows access to UPI to 400+ Mn feature
phone subscribers and facilitates low value transactions in offline mode through on-device
wallet.
 RBI Payments Vision 2025: The RBI plans to achieve certain outcomes such as 3x
increase in number of digital payment transactions, increase of registered customer base
for mobile based transactions by 50% CAGR, increase in PPI transactions by 150%,
increase of ard acceptance infrastructure to 25 Mn by 2025.
Key challenges: how regulators and banks
will approach the Fintech industry
Banks are getting more and more active in FinTech
Barclays, Goldman, CITI, Santander and BBVA are leading the show
23

15
17 Major Bank Investments to VC-backed Fintech Companies +61%
more companies

Note/source: Source: Mattermark,

-2015 -2016 funded by banks

Life.SREDA VC analysis, Crunchb

13
in 2016

8
9
7
6 6 6
5 5
4 4 4 5
4 4 4
3 3 3 3 3 3 3 3
2 2 2 2 2
1 1 1 1 1 1 1 1 1 1 1 1
1

Mitsubishi UFJ
Credit Suisse

BNP Paribas

Societe Generale
Wells Fargo

Mandiri Bank
Barclays

Morgan Stanley

Credit Agricole
BBVA
Citi Group

OCBC
UBS
Mizuho

Siam Commercial Bank

Goldman Sachs

Capital One

ICICI
JP Morgan
HSBC
Commerzbank
Santander

Sberbank
Chin

Chin
a Development

a Construction
Bank

Bank
Leaders are Top South-Asian banks are starting to follow ~30% banks
mainly from developed Chinese/HK/Japanese/Korean megabanks invested via their own
fintech regions with playing active role in FinTech: DBS, OCBC, UOB, Siam Commer- venture instruments
US, UK, Europe. cial Bank, Mandiri, RHB, MayBank, CIMB, KasikornBank and others – VCs, accelerators,
laucnehd a bunch of initiatives related to fintech incubators
Banks and Fintech. For what reason?
Fintech offers banks access to technologies, brings new ideas to market at speed,
enables to add value from bank’s data and changes bank’s culture

Why banks need FinTech? Why FinTech need banks?

Acces to ideas Acces to customers - trust, inertia
Acces to new technology Acces to clearing and Central Bank
settlement
Acces to agility: speed to Successful Acces to in-depth payments expertise
market Acces to expertise
around data Exposure to Partnership Acces to data
different culture Avoidance of regulation

Clearly, not all of today’s banks will survive. The survivors will be those that reimagine
relationships with their customers and partners.
IMPLICATIONS
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